Deal with IMF to be finalised next month, says Miftah
| Finance minister says IMF loan will also open ways to receive borrowings from WB, ADB
| 14m poor families to get benefit from PM’s cheap diesel and cheap petrol programme
ISLAMABAD – Federal Minister for Finance and Revenue Miftah Ismail on Saturday said that International Monetary Fund (IMF) was not only important for Pakistan to get loan but it would also open ways to receive borrowing from other multilateral organizations like Word Bank, Asian Development Bank and others.
Addressing a press conference along with Minister of State for Finance Ayesha Ghous Pasha, the Finance Minister informed that staff level agreement with the IMF is expected in next month (June). The Fund would release the tranche after its executive board gives approval following the staff level agreement.
Talking about the expected foreign inflows, Miftah Ismail informed that Pakistan is expecting to receive $5 billion from the IMF in medium term. He expressed the hope that the Fund would accept Pakistan’s request to increase the loan volume by $2 billion to $8 billion and extend the programme by one year. The country had already $3 billion. Meanwhile, the country has projected to receive one billion dollars from the World Bank within the current fiscal year (before end of June). The government has also estimated to receive funds from Asian Infrastructure Investment Bank and $1.5 billion from the ADB in November this year. “Around $8.9 billion are already in the pipeline from World Bank,” he added.
The Finance Minister said that Saudi Arabia has agreed to give extension of its $3 billion, which is deposited in State Bank of Pakistan after the due date of end of December. However, he said that Saudi Arabia would announce additional support, which would be shared in July this year. He informed that we would hear good news from China in next few days on economic front.
He clarified that no summery has been moved regarding increasing electricity tariff so far. To a question about load shedding, he said the previous government had not made any agreement related to purchase of LNG. ”We are buying LNG at expensive rates, therefore, currently; it’s not possible to end load shedding as the national exchequer is empty.” However, maintenance process of 2500MW out of 7,500MW power plants has been started as these power plants were shut down during the tenure of the previous government.
The Minister also clarified that there was no discussion on privatization with IMF in recent talks held in Doha, Qatar. However, he explained that the country needed to privatize certain entities including Discos and power companies for its own interest to reduce burden on national exchequer.
Talking about the recent increase in petrol prices, Finance Minister Miftah admitted that it would enhance the inflation rate. However, in case the government did not increase the prices, it would result in more inflation, as the government was bearing the burden on subsidies that led to currency depreciation in last few weeks. He explained that rupee has gained value soon after increasing petroleum products prices. Rupee has strengthened by around Rs2.5 against dollar.
Meanwhile, he said that stock market also moved positively adding that it would also have positive impact on banks, Kibor would also reduce and mitigate the liquidity pressure faced by government.
The Minister said that the government intended to provide relief to the poor against the inflationary pressure which was created due to inability of the previous government. He said the government would try its best to provide maximum relief to the poor of the country.
The recent hike in oil prices would help in reducing subsidy by Rs60 billion. He criticised the previous government for making a deal with the IMF on oil prices. Under the commitment, the government would compel to give no subsidy in addition to Rs30 per litre levy. “The government was losing Rs84 per litre on diesel. [If we] increase that and add Rs30 levy [as committed by Tarin], it comes to Rs114. [if we] Add this to the existing diesel price which is Rs144, the price should be Rs258. Add sales tax to it and it be around Rs300 and Rs260 for petrol.”
He rejected the claims of former finance minister Shaukat Tarin regarding allocating subsidy for petroleum products. He said that after the price hike on Thursday, the price of petroleum products will not be increased on June1.
The finance minister also announced that the budget for the fiscal year 2022/23 will be announced June 10.
Earlier, the Finance Minister shared the details of the Prime Minister’s ‘cheap diesel and cheap petrol programme’ to compensate weaker segments of the society from the hike in prices of petroleum products. Under the programme, the government will provide targeted subsidies of Rs2000 per month to 14 million families, who are living below the poverty line. Around 7.3 million recipients are already registered with Benazir Income Support Program (BISP) and if these are excluded there are 6.7 million poor households having below 37 poverty score. This program will cost Rs28 billion in one month. He said the relief amount will also be incorporated in the upcoming budget.
Miftah Ismail said woman head of the family, whose household income is less than Rs40,000 per month, can register themselves for this program by sending their National Identity Card number at number 786. He said that government would provide flour at Rs40 per kilogram and sugar at Rs70 per kilogram at Utility Stores Corporation.